NONE of us can have escaped noticing the high cost of fuel. It's now so high that it's bcoming an issue for those company car drivers receiving reimbursement through the Advisory Fuel Rates.

These Advisory Fuel Rates (AFRs) are designed to reimburse company car drivers for business mileage undertaken for their company. But, as Stewart Whyte discusses in his Special Report Business car drivers are subsidising employers on fuel, the AFR rates are starting to move out of kilter with reality.

It was also a question asked in a discussion group I belong to.

So let's explore this, taking my Audi A6 TDIe as an example on a business journey I did last week. The Audi has a combined economy figure of 53.3mpg, but an actual running average of 43mpg. The Advisory Fuel Rate for a 2.0 diesel is 11p per mile. Here are the maths, starting with the actual running average.

• Audi A6 TDIe
• 200 miles @ 43mpg
• 11p per mile AFR = £22
• 4.7 gallons @ 544.2p per gallon (AA April average for diesel) = £25
• Driver subsidising journey by £3

However, if you take the official figure, the maths swing in favour of the driver.

• Audi A6 TDIe
• 200 miles @ 53.3mpg
• 11p per mile AFR = £22
• 3.75 gallons @ 544.2p per gallon (AA April average for diesel) = £20
• Driver benefits by £2

So the balance is very delicate. And while even the most considered eco-driving will help - I have seen over 54mpg on a single journey in my Audi - traffic conditions really dictate what that average might be.

There's little sign that fuel prices will lessen in the near future. Which means that the issue won't go away.

As a business owner, you might note the AFR rates are 'advisory'. You can use a higher figure without paying tax or National Insurance, but only if you can demonstrate to the taxman that the actual cost was higher. Clearly, this is an option, but you will need to take specialist advice first and ensure HMRC agrees with you before implementing any rise.

Until then, HMRC ought to consider action to change the AFR rates - the next change is due on 01 July. In the meantime, businesses and company car drivers should consider ways of mitigating the cost, perhaps by taking alternative travel, or by rescheduling meetings to take advantage of off-peak traffic flows to ensure the most economical journey.

But HMRC take note: the cost of AFRs needs to be reassessed. Immediately.

TAGS: Advisory Fuel Rates